Tag: Ch.14

OM in the News: Air Force Battles to Overhaul its ERP Systems

air forceAs we write in Chapter 14 (MRP and ERP): “ERP systems are expensive, full of hidden issues, and time-consuming to install.” The U.S. Air Force provides a perfect case study for your class. After a failed $1 billion effort to modernize its aging IT infrastructure, the  Air Force is working on a new Enterprise Resource Planning system. Part of the effort, says The Wall Street Journal/CIO Journal (Feb. 5,2013), will require finding deficiencies buried within its patchwork network of computer systems, some of which are decades old.

In 2005, the Air Force attempted to replace aging systems with new hardware and new ERP software from Oracle. The Air Force signed a $627 million contract with Computer Sciences Corporation to integrate the system, but 7 years and $1 billion later, it realized that it would cost another $1 billion just to implement only 25% of the planned capabilities. The Air Force’s main mistakes were failing to define its business requirements while trying to upgrade its disparate systems.

The new project, whose costs the Air Force declined to reveal, calls for a new software system that offers a complete view of the Air Force’s business operations, including its supply chain, sales and operations, maintenance repair and engineering data. But to meet the 2017 deadline, the team must comb through thousands of deficiencies across 19 legacy systems. For example, the current system does not allow the deletion of vehicle ID numbers, which means the Air Force cannot properly track and take inventory of existing vehicles.

“We think we can break this problem up into smaller subsets, field those subsets on a quicker cycle and at a lower cost, and with less risk,” says the general in charge. But the CEO of one IT consulting firm said that while he agreed that the Air Force’s approach of breaking up the project into smaller subsets is correct he wondered why this wasn’t done before the Air Force spent so much money on the previous project. “The most basic tenet of ERP implementation is know why you need the system and how you intend to make it work.”

Discussion questions:

1. Why are ERP (and other large programs) so difficult to implement?

2. What mistakes did the Air Force make in this project?

Guest Post: Continuous Process Improvement Tools

We welcome  this Guest Post from  Kevin Watson, Asst. Prof. in the Dept. of Supply Chain and Info. Systems, at Iowa State U.

OM students are frequently reminded that data accuracy is a prerequisite to effective inventory management and operation of MRP systems- in fact Barry just blogged about this on November 4th. As professors, we often discuss the application of lean and quality improvement techniques; however, discussion tends to focus on manufacturing processes and students frequently miss that continuous improvement techniques can be applied to non-manufacturing activities. An article I just read, “Continuous Improvement Approach Reduces Errors in Records” , provides an example of continuous process improvement tools utilized to address paperwork errors.

The article discusses a holistic solution to address record errors in shop floor packets traveling with medical devices during manufacturing. MEDRAD, a 2003 Malcolm Baldrige National Quality Award recipient, experienced error rates as high as 20% in the paperwork necessary to track products through manufacturing ,resulting in compliance issues and causing unnecessary rework and delays. The company addressed this issue through the use of a quality improvement project utilizing technology, process, and people based solutions. The project resulted in a reduction of record inaccuracy to 2.2%, saving the company $40,000 and accruing significant non-financial benefits.

Addressing non-manufacturing errors while retaining the familiar touchstone of the manufacturing environment, it is an excellent means to expand student understanding of quality management tools applied to non-manufacturing processes and to begin the discussion of their application in the service/administrative environments. The article would be an excellent complement to the Quality Management chapters (Ch6/S6) and could be touched again during a discussion of inventory record accuracy in conjunction with Material Requirements Planning (Ch 14).